Coal industry: 2017 in review

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23 January 2018

Coal industry: 2017 in review

Report summary

China and the weather played important roles in the 2017 coal industry. Cyclone Debbie's impact lasted far longer than the bad weather. And, once again, policy action in China agitated markets, lifted prices, intensified volatility, and produced a large measure of uncertainty. Suppliers eyed high prices longingly, but the hard lessons of the recent past made them cautious about exuberant expansion. Still, prices helped them repair balance sheets. India continues to chip away at power industry reform adding incrementally to coal's possibilities. In the US, natural gas and coal remain locked in a price battle that has no end. After years of decline, encouraged by falling prices, coal costs turned upward in 2017. Even so, margins rose and M&A activity rebounded somewhat. But, there was also growing proof that financing new coal projects is becoming more difficult. 

Table of contents

  • Key factors
    • Chinese policy drove thermal coal prices higher with a boost from a warm summer
    • A year-long metallurgical coal price yo-yo
    • Policy and regulation take center stage
      • Environmental protection was a primary goal
      • Induction furnaces were closed
      • Stiffer import coal restrictions were enacted
      • Data proves the power sector grew but is growth sustainable?
      • A year of two halves
      • Increasing focus on air pollution and environmental standards
    • The Clean Power Plan is on the way out
    • The Grid Resiliency Pricing Rule is rejected
  • Cyclone Debbie roiled markets for months
  • Natural gas often outcompeted coal in the US
  • Coal benefited from nuclear industry issues
  • Financing is becoming more difficult

Tables and charts

This report includes 7 images and tables including:

  • Seaborne thermal coal cash cost and margin
  • Seaborne metallurgical coal cash cost and margin
  • Thermal coal benchmark prices (real US$/t)
  • Thermal coal market prices
  • Metallurgical coal market prices
  • All technical and commercial losses under UDAY
  • Average revenue and cost difference under UDAY

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